TMI Blog2019 (8) TMI 1804X X X X Extracts X X X X X X X X Extracts X X X X ..... akeries and confectionaries makers - Though margarine was not consumed directly and not used for normal cooking as other oils like coconut, sunflower, etc., fact that it was used for preparing bakery items consumed by human beings made it edible - Having around 80% fat, and being in nature of oil, it has to be considered as edible oil. It may be seen that butter consists milk fat contents of 80% or more but not more than 95% by weight. In the case of Aluva Sugar Agency also the fat contents of Margarine is around 80% and thus the same is used as substitute of butter. However, in the case before us the fat contents is only 26%. Thus the product 'Cooking Cream' cannot be said to be a substitute or imitation of butter. Thus Cooking Cream is not similar to Margarine and hence the case law relied upon by the appellant in Aluva Sugar Agency holds no water. The appellant further relied upon the decision of Kerala High Court in the case of M/S. PARISONS FOODS PVT. LTD. VERSUS JOINT COMMISSIONER OF COMMERCIAL TAXES DEPARTMENT OF COMMERCIAL TAXES, THIRUVANANTHAPURAM, KERALA [ 2018 (1) TMI 1195 - KERALA HIGH COURT] where various hydrogenated vegetable oils (vanaspati) and li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient, but a totally new product having different name character and use - it does not merit classification under chapter heading 1517, rather merits classification under chapter heading 21069099, as preparations not elsewhere specified or included as it does not remain fraction of palm oil. The impugned item merits classification under chapter heading 2106 of the schedule to the Customs Tariff Act, 1975 and chargeable to GST accordingly. It is also found that the Advance Ruling Authority has gone through the matter in detailed way and passed a well reasoned speaking order and hence, there is no reason to interfere with the order. Appeal dismissed. - HAR/HAAAR/2018-19/05 - - - Dated:- 7-8-2019 - AMIT KUMAR AGARWAL AND ANIL KUMAR JAIN, MEMBER Order under Section 101 of the Central goods and Services Tax Act, 2017/ the Haryana Goods and Services Tax Act, 2017 The present appeal has been preferred by M/s Khera Trading Company situated at Sanoli Road, Near Govind Tobacco Factory, Panipat, Haryana-132103 ('Appellant') against the Advance Ruling No. HAR/HAAR/R/2018-19/09 Dated 30.08.2018 passed in their application dated 04.06.2018. BRIEF FACTS OF THE CAS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixture is transferred to filling machine where it is filled in 200 ml and 500 ml pouches. These pouches are sealed and packed in an outer carton weighing 12 kg to 15 kg. 3. The contention of the appellant was that since cooking cream contains 26% edible oil along with some other ingredients, it forms a mixture/preparation of vegetable oil and that it is classifiable under chapter heading 1517 as edible mixture or preparations of animal or vegetable fats or oils or fractions of different fats or oils of this chapter, other than edible fats or oils or their fractions of heading 1516 . Hence, the appellant contended that this product is chargeable to 5% IGST under S.No.89 of Schedule-I to Notification No. 1/2017-Integrated Tax. 4. Based on the above submissions, the appellant raised the following question on which advance ruling was sought.- Whether the product 'cooking cream' is classifiable under chapter heading 1517 [S No 89 of Schedule-1 of Notification No 1/2017-Integrated Tax (Rate) dated June 28,2017, attracting IGST @ 5% / {S.No.89 of Schedule-I of Notification No.01/2017 Central Tax (Rate) dated 28.06.17 attracting CGST @ 2.5%}/ (S.No.89 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple must be applied even in cases where the same has not been expressly provided for in the enactment. 7.3 From the above, it is clear that the Impugned Ruling stands in stark violation to the well-established principles of natural justice. Accordingly, the Impugned Ruling is liable to be set aside and classification adopted by the Appellant accepted. 8. The First Schedule to the Customs Tariff Act is divided into XXI Sections which are in turn divided into 98 Chapters. The dominant constituent in impugned good is vegetable oil. Hence, Chapter 15 and Chapter 21 covering 'edible mixture or preparation of vegetable oils' arise for consideration in the present instance. 8.1 In the present case, the Appellant seeks to classify impugned good under Heading 1517 whereas the Authority vide its Impugned Ruling has classified the same under Heading 2106. It is pertinent to extract each of the above headings for ascertaining their scope and determining the classification of impugned good. Chapter 15 Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2106 90 91 ---- Diabetic foods 2106 90 92 ---- Sterilized or pasteurized millstone 2106 90 99 ---- Other 8.2 The Appellant contends that impugned good merits classification under Tariff Item 1517 90 90 bearing description 'Other'. It is a residuary entry which is provided under Heading 1517. Therefore, in order to classify under the aforesaid Tariff Item, the product must qualify under Heading 1517. 8.3 The Authority in the Impugned Ruling has held that impugned good is classifiable under Heading 2106. It is submitted that the relevant Tariff item under heading 2106 is 2106 90 99 bearing description 'Other' which is a four-dash entry covered under triple-dash entry 'Other'. The triple-dash entry is further covered under Sub-heading 2106 90 bearing description 'Other', which is a single-dash entry covered under Heading 2106. Therefore, the impugned good must answer to the description of goods mentioned against Heading 2106 in order to merit classification under Tariff item 2106 90 99. 9. The impugned goods are generally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Wood Craft Products Limited, 1995 (77) ELT 23 (SC), the Apex Court observed that the HSN Explanatory Notes serve as a safe guide for ascertainment of meaning of a term used in the Tariff Schedule in case of doubt. The relevant extract has been reproduced as under: We are of the view that the Tribunal as well as the High Court fell into the error of overlooking the fact that the structure of the Central Excise Tariff is based on the internationally accepted nomenclature found in the HSN and, therefore, any dispute relating to tariff classification must, as far as possible, be resolved with reference to the nomenclature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself 9.8 In the case of Reckitt Benckiser (India) Limited, v. Commissioner, Commercial Taxes, 2015 (7) SCC 126 , the Apex Court held that when the taxation statute is aligned with the HSN codes, then, necessarily the interpretation has to be based on the HSN code, as available in the Customs Act. The judgment has been relied upon in the case of Parisons Food Private Limited v. Joint Commissioner of Commercial Taxes, 2018 (11) GSTL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Kerela, 2011 (272) ELT 649 (SC) in which the following characteristics of margarine were discussed:- Margarine is used as substitute for butter (dairy product) specially in bakery products. In the instant case, impugned good is used as a substitute for dairy cream (dairy product) for use in soups, gravies etc. Margarine is prepared from refined and/or hydrogenated oils of sunflower, soyabean, cotton seed, palmoline, palm, sesame oils, vegetable oils, salt, permitted emulsifiers and stabilizers. In other words, the vegetable oil is present in maximum percentage. Thus, it is regarded as a preparation of vegetable oil and fractions thereof Margarine is not consumed directly i.e. in the form in which it is available in the market or used for normal cooking as other oils like coconut, sunflower, etc., rather it is used for preparing bakery items consumed. 10.2.1 Impugned good is prepared by mixing various ingredients in hydrogenated palm kernel oil. Out of all the ingredients, vegetable oil is present in maximum percentage of 26 per cent. Although 63.50 per cent water is also present, it is added solely for the purpose of emulsifying all the ingredients. Emu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, impugned good cannot be called a cream under the FSS Act. However, a non-dairy substitute for a dairy cream prepared by imitating the constitution thereof by using vegetable oil, vegetable fat, skimmed milk powder etc. can be called a cream analogue, connoting that it is similar to cream. As submitted above, Heading 1517 covers preparation of vegetable fats or oils such as margarine etc., that are substitute of various dairy products. Impugned good being a non-dairy product is prepared using the same ingredients and qualifies as a cream analogue. 12. In the case of Shree Gopal Vanaspati Limited v. CC, 2014 (310) ELT 308 (Tri-Del), the classification of bakery shortening was under dispute. The assessee proposed the correct classification of the product under Heading 1516, however, the revenue classified the product under Heading 1517. The Tribunal observed that the shortenings were produced by further working up of vegetable fats by way of emulsification in texture resulting in tenderizing effect in finished products. Accordingly, the product was classifiable under Heading 1517. 12.1 US Customs Cross Ruling NY C81464 dealt with classification of vegetable fat sprea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to be covered under Heading 2106. 13.4 In the case of CCE v. Maharshi Ayurveda Corporation Limited, 2006 (193) ELT 10 (SC), the product under consideration was herbonic tonic, a mixture of assorted vegetarian and dry fruits and seeds which could be consumed as such. The assessee sought to classify the products under Heading 2008 whereas the revenue sought to classify the product under Heading 2106. The Apex Court observed that product was included under Heading 2008, hence Heading 2106 automatically became inapplicable. 13.5 In the case of CC v. Abott Healthcare Private Limited, 2015 (328) ELT 129 (Tri-Mum.), the product under consideration was 'Mama's Best Premium Chocolate', a nutritional powder. The importer classified under tariff item 1901 90 90 bearing description 'Other' as against revenue's classification under tariff item 2106 90 00 bearing description 'Other'. The Tribunal after considering the nature of goods and HSN Explanatory Notes, noted that the imported goods were classifiable under Heading 1901. It further held that Heading 2106 is a residuary entry. Thus, once goods are classifiable under a particular Heading, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bansal, Miss. Anshika Agarwal, Sh. Rakesh Gupta and ETO, Panipat Shri Ajay Kumar, attended the hearing on the fixed date and time. 16.1 During the hearing the appellant while reiterating the submissions made in their appeal papers put forth that the basic emphasis of their submissions was that impugned goods are correctly classifiable under Heading No. 1517. 16.2 Shri Puneet Bansal, Advocate emphasized that as per HSN Explanatory Notes, the product Cooking Delite is classifiable under Heading 1517 of Customs Tariff Act. He submitted that HSN Explanatory Notes for Heading 1516, inter alia, provides that The heading includes the products as described above, even if they have a waxy character and even if they have been subsequently deodorized or subjected to similar refining processes, and whether or not they can be used directly as food. But it excludes hydrogenated etc, fats and oils and their fractions which have undergone such further preparation for food purposes as texturation (modification of the texture or crystalline structure) (Heading 1517) . 16.3 As per HSN Explanatory Notes, this heading covers margarine and other edible mixtures or preparations of animal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings. 18.1 The appellant contented that the product cooking cream is primarily based on vegetable fat as its main ingredient to which other ingredients are added, forming a mixtures/preparation of vegetable fat. Hence, it is classifiable under Heading 1517 which covers Edible mixtures or preparation of vegetable fats or vegetable oil or of fractions of different vegetable fats or vegetable oil of this Chapter, other than edible fats or oils or their fractions of heading 1516 and chargeable to 5% IGST as specified under S. No. 89 of Schedule-I of Notification No. 1/2017-Integrated Tax. 18.2 The question for determination in this appeal is whether the product cooking cream manufactured/ supplied by the appellant merit classification under Heading 1517 as claimed by the appellant or classifiable under Heading 2106 as determined by the Authority for Advance Ruling, Haryana. 18.3. We found that for any given product, the name, character and use are three important ingredients which decide the classification of any given product. Hence we proceed to examine the classification of impugned item, keeping in mind the above guiding factors. 18.4 The impugned item is being s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le fats or oils or their fractions; or (3) Both animal and vegetable fats or oils or their fractions. The products of this heading, the fats or oils of which may previously have been hydrogenated, may be worked by emulsification (e.g., with skimmed milk), churning, texturation (modification of the texture or crystalline structure), etc., and may contain small quantities of added lecithin, starch, colouring, flavouring, vitamins, butter or other milk fats (subject to the restrictions in Note 1 (c) of this Chapter). The heading also covers edible preparations made from a single fat or oil (or fractions thereof), whether or not hydrogenated, which have been worked by emulsification, churning, texturation, etc. The heading includes hydrogenated, inter-esterified, re-esterified or elaidinized fats and oils or their fractions, where modification involves more than one fat or oil. The principal products of this heading are:- (A) Margarine (other than liquid margarine, which is a plastic mass, generally yellowish, obtained from fats or oils of animal or vegetable origin or from a mixture of these fats or oils. It is an emulsion of the water-in oil type, genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been found mentioned in the HSN Explanatory Notes in respect of preparations of vegetable oil in the nature of an emulsion of water-in-oil, though it may resemble like a regular cream. 19.2 We found that in the case of Aluva Sugar Agency case cited supra, Hon'ble Supreme Court of India has held that Margarine - Made only from vegetable oils - Used exclusively as raw-material by bakeries and confectionaries makers - Though margarine was not consumed directly and not used for normal cooking as other oils like coconut, sunflower, etc., fact that it was used for preparing bakery items consumed by human beings made it edible - Having around 80% fat, and being in nature of oil, it has to be considered as edible oil. Margarine is a generic term and it is used as a substitute for butter. It is used in preparation of food articles and specially used for preparing bakery products. For the purpose of manufacturing margarine, refined and/or hydrogenated oils of sun-flower, soyabean, cotton seed, palmoline, palm and sesame oils are used. Moreover, vegetable oils, salt, permitted emulsifiers and stabilizers are also used for manufacturing margarine. So far as the margarine manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il were properly melted and additives (like Sesame Oil, Vitamin A and Vitamin D) were added to the mixture. The mixture so formed was kept under agitation for 45 minutes to get a homogenous mass. The vanaspati was passed through Rotators and Crystallizers which churned the product from 45 C to 20 C; and the chilled mixture of vanaspati so formed was called Bakery Shortening which was then packed in 15 Kg packs and kept for tempering in air-conditioned room for a day. We found that the additives in the said case were only those specified in HSN Explanatory notes. No other additives or ingredients outside the scope of HSN Explanatory Note of Heading 1517 were available, However, in the case before us we found that appellant is using Sugar as an ingredient which does not found place in the list of ingredients described in HSN Explanatory Notes of Heading 1517. Thus, the aforesaid case law of Parisons Foods Pvt Ltd is not applicable to the instant case. Moreover, the case of Parisons Foods Pvt Ltd relied upon by the appellant has not attained the finality and pending with the Apex Court. 21. Thus, we are of the considered view that the product 'Cooking Delite' is not classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation under chapter heading 21069099 which refers to food preparations not elsewhere specified or included as it does not remain fraction of palm oil. Here it is important to take note of the General Rules for the interpretation of tariff Rule 2 (b) provides that classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. 23.3 Rule 3 (a) provides that when by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be made under the heading which provides the most specific description compared to headings providing a more general description. 23.4 In the instant case, the impugned item is mixture of vegetable oil and other food stuffs. After the manufacturing process, as detailed in the appeal, it is observed that individual identity of all the mixtures is lost and what, emerges is totally a different item, a new product having different name, character and use. Thus, cooking cream cannot be said to be merely a mixture of vegetable oil with other ingredient, but a totally new product having different name character and use. Under such c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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